UFJ set to seal pact for merger

DESPITE leaving the way open for a rival bid from Sumitomo, ailing Japanese bank UFJ may sign the agreement for a rescue plan by Mitsubishi Tokyo Financial Group as early as this week, according to reports in Tokyo.

A merger between UFJ and MTFG would create the world's largest bank.

Just this week, UFJ, under pressure from shareholders, said it would consider a bid by Sumitomo.

UFJ is mired in a court battle with Sumitomo over a previous agreement to sell it UFJ's trust banking business. The court did not yesterday, as expected, rule on an appeal to overturn an earlier ruling that UFJ must adhere to the deal.

A decision could be made today.

According to Yomiuri newspaper, UFJ and MTFG are preparing two possible agreements - one that includes UFJ's trust bank unit and one that does not, depending on the outcome of the court case.

UFJ and MTFG had been expected to sign a basic merger pact by the end of this month.